Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
1. Can a registered charity exclude the amount of previously receipted donations from the calculation of the disbursement quota as defined in subsection 149.1(1), for the years pertaining to the Donations where a payment, determined with reference to the donations, is subsequently made by the Charity to the donor?
2. Will a registered charity lose its registered status as a consequence of making the payment referred to in 1?
3. Would a charity be considered to have conferred a personal or taxable benefit on a donor if the payment referred to 1. is made?
Position:
1. No. The charity may not revise the computation of the disbursement quota for the years in which the donations were originally received.
2. Unable to Rule.
3. Unable to Rule.
Reasons:
1. There is nothing within the definition of disbursement quota in subsection 149.1(1) which would permit the exclusion therefrom of donations for which a receipt has been issued.
2. The revocation provisions (subsections 149.1(2) and 168(1)) are ministerial discretion provisions (i.e. "The Minister may") and it is within the mandate of the Charities Directorate whether the registered status of a charity will, in fact, be revoked in any particular situation. Confirmation as to whether a proposed transaction will result in a revocation of a charity's registration, must be obtained from the Charities Directorate.
3. Question of fact requiring a full review (audit) of the surrounding circumstances.
XXXXXXXXXX 2000-004762
XXXXXXXXXX, 2001
Dear Sir:
Re: Advance Income Tax Ruling Request, XXXXXXXXXX
This is in reply to your letter of XXXXXXXXXX in which you request and advance income tax ruling on behalf of the above named taxpayer. We also acknowledge the information provided in subsequent telephone conversations in connection with your request (XXXXXXXXXX).
We understand that, to the best of your knowledge and that of the taxpayer involved, none of the issues involved in the ruling request:
(i) is in an earlier return of the taxpayer or a related person
(ii) is being considered by a tax services office or taxation centre in connection with a previously filed tax return of the taxpayer or a related person
(iii) is under objection by the taxpayer or a related person
(iv) is before the courts or, if a judgment has been issued, the time limit for appeal to a higher court has not expired, and
(v) is the subject of a ruling previously issued by the Directorate;
Unless otherwise stated, all references to a statute are to the Income Tax Act R.S.C. 1985 (5th Supp.), c.1, as amended, (the "Act") and all terms and conditions used herein that are defined in the Act have the meaning given in such definition unless otherwise indicated.
Our understanding of the facts, proposed transactions and the purpose of the proposed transactions is as follows:
FACTS
1. XXXXXXXXXX (the "XXXXXXXXXX") XXXXXXXXXX is incorporated under the laws of Canada and is a charitable organization as defined in Section 149.1 of the Act. The XXXXXXXXXX was incorporated on XXXXXXXXXX.
2. The XXXXXXXXXX carries out charitable activities in Canada XXXXXXXXXX.
3. The XXXXXXXXXX activities are funded in part through donations received from members and supporters. The XXXXXXXXXX is authorized by the Act to issue receipts for donations received by donees which entitle the donee to income tax deductions or income tax credits, depending on the particular donee.
4. XXXXXXXXXX ("Mr. A") XXXXXXXXXX and throughout the years XXXXXXXXXX has made donations to the XXXXXXXXXX (the "Donations") in the following amounts:
XXXXXXXXXX.
5. Official donation receipts were issued by the XXXXXXXXXX for the total Donations in each of the years in accordance with the provisions of section 3501 of the Regulations to the Income Tax Act.
6. XXXXXXXXXX.
7. XXXXXXXXXX.
8. Mr. A has, XXXXXXXXXX, demanded that the XXXXXXXXXX pay to him, an amount equal to the amount of the Donations he has made to the XXXXXXXXXX since XXXXXXXXXX (the "Payment"). XXXXXXXXXX.
PROPOSED TRANSACTION
Subject to a review of the consequences of making the Payment, the XXXXXXXXXX proposes to make the Payment to Mr. A.
PURPOSE OF THE PROPOSED TRANSACTION
The purpose of the proposed transaction is to resolve the difficult situation between the XXXXXXXXXX and Mr. A, by making the Payment, without causing the XXXXXXXXXX to lose its status as a registered charity.
RULING
We are unable to provide you with the confirmations or rulings requested.
You requested rulings as to whether the XXXXXXXXXX may have its charitable registration status revoked as a consequence of making the Payment pursuant to either subsection 149.1(2) or subsection 168(1). As discussed, this is a matter that may be pursued by you directly with the Charities Directorate.
You requested a ruling as to whether the XXXXXXXXXX will be considered to have conferred any personal or taxable benefit on Mr. A as a result of making the Payment. We are unable to provide a ruling on this question of fact since this determination would depend on whether or not the payment is made as a consequence of employment. In this case this cannot be determined on an advance income tax ruling basis.
You requested a ruling that the Payment would result in a reduction of the XXXXXXXXXX disbursement quota for the years in which Mr. A made his donations. We are unable to provide the requested ruling. Provided the preceding statements constitute a complete and accurate disclosure of all the relevant facts, the proposed transaction and the purpose of the proposed transaction and provided further that the proposed transaction is carried out as described above, our ruling is as follows:
The "disbursement quota" within the meaning of subsection 149.1(1) of the Act, for the taxation years referred to in paragraph 4, cannot be revised as a consequence of making the Payment.
The ruling is given subject to the limitations and qualifications set out in Information Circular 70-6R3 dated December 30, 1996 and is binding on the Canada Customs and Revenue Agency provided that the proposed transactions are completed before XXXXXXXXXX.
Yours truly,
XXXXXXXXXX
Manager
Financial Institutions Section
Financial Industries Division
Income Tax Rulings
Policy and Legislation Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2001
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2001
Email this Content